Risk and the allocation of talent in the Roy model

German Cubas; Pedro Silos; Vesa-Heikki Soini

doi:10.1016/j.econlet.2024.111623

Risk and the allocation of talent in the Roy model

German Cubas^*
, Pedro Silos
, Vesa-Heikki Soini

^*Huvudförfattare för detta arbete

Nationalekonomi, Helsingfors

Forskningsoutput: Tidskriftsbidrag › Artikel › Vetenskaplig › Peer review

Sammanfattning

With risk-averse workers and uninsurable earnings shocks, competitive markets allocate too few workers to risky jobs. Using an equilibrium Roy model with incomplete markets, we show that in competitive equilibrium, risky occupations are inefficiently small and hence talent is misallocated.

Originalspråk	Engelska
Artikelnummer	111623
Referentgranskad vetenskaplig tidskrift	Economics Letters
Volym	236
ISSN	0165-1765
DOI	https://doi.org/10.1016/j.econlet.2024.111623
Status	Publicerad - 04.03.2024
MoE-publikationstyp	A1 Originalartikel i en vetenskaplig tidskrift

Nyckelord

511 Nationalekonomi

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10.1016/j.econlet.2024.111623

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title = "Risk and the allocation of talent in the Roy model",

abstract = "With risk-averse workers and uninsurable earnings shocks, competitive markets allocate too few workers to risky jobs. Using an equilibrium Roy model with incomplete markets, we show that in competitive equilibrium, risky occupations are inefficiently small and hence talent is misallocated.",

keywords = "511 Economics, Incomplete markets, Misallocation, Occupations, Risk, Roy model",

author = "German Cubas and Pedro Silos and Vesa-Heikki Soini",

note = "Funding Information: We thank the editor and an anonymous referee. We also thank participants of different conferences and venues where the paper was presented and specially, Dante Amengual, Juan Dubra, Max Dvorkin, Steve Craig, Kevin Donovan, Andres Erosa, Rafael Guntin, Chris Herrington, Erik Hurst, Joe Kaboski, Alexander Ludwig, Bent Sorensen, and Felix Wellschmied for their detailed and insightful comments. Publisher Copyright: {\textcopyright} 2024 Elsevier B.V. Publisher Copyright: {\textcopyright} 2024 Elsevier B.V.",

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T1 - Risk and the allocation of talent in the Roy model

AU - Cubas, German

AU - Silos, Pedro

AU - Soini, Vesa-Heikki

N1 - Funding Information: We thank the editor and an anonymous referee. We also thank participants of different conferences and venues where the paper was presented and specially, Dante Amengual, Juan Dubra, Max Dvorkin, Steve Craig, Kevin Donovan, Andres Erosa, Rafael Guntin, Chris Herrington, Erik Hurst, Joe Kaboski, Alexander Ludwig, Bent Sorensen, and Felix Wellschmied for their detailed and insightful comments. Publisher Copyright: © 2024 Elsevier B.V. Publisher Copyright: © 2024 Elsevier B.V.

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Y1 - 2024/3/4

N2 - With risk-averse workers and uninsurable earnings shocks, competitive markets allocate too few workers to risky jobs. Using an equilibrium Roy model with incomplete markets, we show that in competitive equilibrium, risky occupations are inefficiently small and hence talent is misallocated.

AB - With risk-averse workers and uninsurable earnings shocks, competitive markets allocate too few workers to risky jobs. Using an equilibrium Roy model with incomplete markets, we show that in competitive equilibrium, risky occupations are inefficiently small and hence talent is misallocated.

KW - 511 Economics

KW - Incomplete markets

KW - Misallocation

KW - Occupations

KW - Risk

KW - Roy model

UR - https://www.scopus.com/pages/publications/85186730492

U2 - 10.1016/j.econlet.2024.111623

DO - 10.1016/j.econlet.2024.111623

M3 - Article

SN - 0165-1765

VL - 236

JO - Economics Letters

JF - Economics Letters

M1 - 111623

ER -

Risk and the allocation of talent in the Roy model

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